Dublin houses cost 30% above average

House prices in Dublin are soaring and are almost a third above the national average, with the gap expected to widen before the end of 2014.

Other urban centres, such as Cork and Galway, are also set for higher prices this year, but the market remains stagnant elsewhere and has yet to bottom out.

Although the rate of decline outside Dublin continues to moderate, this year will see a growing divergence between house prices there and the rest of the country with the shortage of homes in the capital fuelling demand.

There are around 3,000 properties for sale in Dublin — down 30% from the same time last year, according to the latest house price survey issued by MyHome.ie.

The Dublin property market turned a corner last year with asking prices for homes up 2.4%, the highest in seven years. In Cork, the asking prices for houses remained static, but is expected to grow this year.

Angela Keegan, managing director of MyHome.ie, warned the level of increase in Dublin is worrying.

“The price increases we are seeing in Dublin are unsustainable over the medium term and we don’t want to see the same pattern emerge in Cork and Galway.

“Dublin dominates the property market with over a third of all transactions so clearly we need to see the Government and the relevant local authorities taking action. The banks also need to address the mortgage arrears issue and free up properties so people can get on the property ladder.”

However, Ms Keegan said that 2013 was a positive one overall for the property sector after six very challenging years. “It’s very heartening to see the median price of four-bed semis rising or remaining stable in most of Leinster and Munster,” she said. “We believe prices will continue to rise in key areas of Dublin, Cork and Galway in the coming year.”

Ms Keegan’s comments were echoed by Caroline Kelleher of DKM Economic Consultants. While the Dublin property market turned a corner during the second quarter of 2013, Ms Kelleher warned that prices outside the capital have yet to bottom out.

“There is now a 28% price differential between mix-adjusted asking prices nationally and in Dublin compared to a 17% difference a year ago,” she said.

The latest figures show the average asking price in Dublin rose by 2.4% last year, the largest annual increase in seven years.

The mix-adjusted asking price nationally now stands at €189,000, down 5.6% on a year ago. There were further signs of price stabilisation in Cork where median asking prices remained unchanged in the city and county throughout the year.